NYAPRS Note: There may not be a year in NY’s past when the legislative season approached with such a large unallocated budget surplus. Combined with a possible shake-up in the Governor’s seat and/or office, and the recent collaboration of democrats in the legislature, the coming season will surely prove interesting and likely favorable for disability communities and the state’s health departments. We’ll be announcing our statewide fall regional forum dates soon, where you will have a chance to hear the latest news from Albany and learn how it effects your community and health. And save the date of February 24, 2015, to join us in Albany for our annual lobby day! Be prepared to join us as we advocate for the behavioral health of all community members, and keep checking enews as we track the budget in advance of legislative session.
‘Sizable’ Settlements Leave NYS with $6.2B Windfall
Crain’s NY; Andrew J. Hawkins, 8/4/2014
s
New York state will finish the current fiscal year with a $6.2 billion budget surplus, the result of several “sizeable” cash settlements with major financial firms in the first four months of the year, the state’s budget division reported Monday.
Gov. Andrew Cuomo’s office is developing “options” for how to spend the settlement windfall, which totals $4.2 billion, such as “funding onetime capital expenses, bolstering reserves, and reducing debt,” the report stated. Mr. Cuomo’s final plan for spending the surplus cash will be released as part of the governor’s fiscal year 2016 budget proposal in January 2015.
“There is the potential for more settlements in the current fiscal year,” the budget office adds.
Most of the settlement is cash—$3 billion—from the $9 billion French bank BNP Paribas, the amount it was ordered to pay for violating sanctions on transferring money to Iran and the Sudan. Other sources include $715 million from Credit Suisse AG and $50 million from the Metropolitan Life Insurance Co. The budget division had previously predicted a $2 billion budget surplus for fiscal year 2016.
Some have speculated that a portion of the surplus should be used to pay off expenses related to the $3.9 billion Tappan Zee Bridge replacement project. Republicans in the state Legislature have suggested using the money to cut taxes while phasing out the state’s utility tax and Metropolitan Transportation Authority payroll tax (a plan maligned by Crain’s columnist Greg David). Others like the Citizens Budget Commission and Crain’s columnist Alair Townsend have called for the money to be put toward paying down the state’s outstanding debt, which totals $55.6 billion.
The settlement windfall amounts to a one-shot source of revenue for the state, which unlike tax receipts cannot be counted on as recurring money to be used to pay down the state’s budget gap, some experts say.
“The state’s got to be very careful in not using these one-shots to offset things like the structural deficit that remains there,” said William Glasgall, ex-managing editor of Bloomberg News and the program and editorial director for the Volcker Alliance’s State/Local Accountability and Improvement programs. “It’s easy to say, ‘I’m going to take this and use for capital spending.’ But is that money that would have been used for education or Medicaid or another purpose? You just want to be sure that that settlement is not going to be used to offset a longer term problem, because that problem will come back next year, and the year after and the year after.”
Some of that money may need to go to the federal government, which is looking to claw back $1.3 billion in Medicaid spending for care at state-run homes for disabled adults. Moody’s declared the recent decision by the federal Centers for Medicare and Medicaid Services to demand repayment for the overspent funds to be a “credit negative” for the state, which is planning on appealing the decision.
The budget office also projects spending $29 million more than originally planned in the enacted budget, mostly as a result of an “increase in the share of Medicaid funded by the General Fund instead of [the New York State Health Care Reform Act], costs for enhanced efforts to control heroin trafficking and use, and a number of modest re-estimates.”